In 1995, Texas proposed a referendum for the legalization of casino gambling.
However, perhaps due to Texas' extreme conservatism, many Texans opposed the idea. Since then, other states have joined Nevada to allow unlimited gambling in their state. From record economic growth to billions of revenue dollars for state expenditures, these states continue to reap from their bold decision while Texas remains watching from the sidelines. Rather than enjoying the same profits as its fellow states, Texas has found it hard to meet its state budget year after year. Instead of taking the road well-traveled--increasing taxes, Texas should take a page from the success stories of these states and legalize casino gambling as a legitimate way of generating much needed state funds. The experiences of states such as Nevada and Louisiana fully illustrate the positive benefits to the economy. First of all, thousands of jobs would be created, which in turn would decrease the unemployment level. Also, tourism would increase which will benefit both local businesses and sales tax revenue growth. The bottom line is that Texas needs money and should no longer view casino gambling as an activity of criminals, but as a multi-billion dollars recreational industry.
It is easy to blame Texas' current deficit problem on the slow economy, but much of the blame can be placed on its inefficient tax system. One of the main reasons that Texas failed to keep up with economic growth stemmed from its heavy dependence on sales tax, which accounted for 55 percent of the state revenue in 2000 (Lavine 11). In 1961, Texas adopted a sales tax levy only on tangible goods, not services. Initially the sales tax seemed sufficient, when the majority of the sales involved goods. However, in the modern economy, the fastest growing sector involves services rather than sold goods. For this reason, when the state needs more money, it has to raise sales tax or cut department spending. For example, in 1984 the sale tax was 4.25 percent, but only six years later it rose to 6.25 percent. Furthermore, cities, counties, transit authorities, and other taxing agents may levy a sales tax up to an additional 2% combined, for a total maximum sales tax of 8.25 percent (Lavine 11).
Despite the elevating taxes, many people argue that Texas has a very low combined state and local tax burden. This is only true at the state level, but at the local level Texas has a very high tax burden - 9th in sales tax per capita and 15th in property tax per capita (Lavine 15). The state managed to portray this image only because Texas pushes funding obligations down to the local level, such as public education. For this reason, cities such as Houston must implement high property taxes to ensure adequate funding for police enforcement, public transportation, and education. Because of the tremendous shortfall this year, the city of Houston resorted to layoff teachers and security personnel to meet budget requirements. Therefore, instead of continued tax hikes or sacrificing much needed state services, why not allow for casino gambling as an alternative source of revenue for the state? The direct economic impact of casino gambling is clear by looking at our neighboring states.
Despite the economic impact of casino gambling, debates exist over whether casino gambling has positive or negative results. Commonly, many people view gambling as immoral and disruptive to family values. Others dismissed it as a harmless, enjoyable recreational activity. Because people enjoy it, they continue to gamble in spite of losing. Any discussion of the motivation of gambling usually starts with the natural comparison to life. Life is a gamble. Everyday people are faced with situations that involve risk and chance. Gambling activities are extensions of the risk and chances in life. Gambling allows the person the choice of engaging in the activity, the amount of risk, and the stakes. The stakes are a necessary element for many people. It turns the bet into not just an opinion but also a commitment. The concept of gambling mimics the risk and chances of life. For example, during the Gold Rush in California, many people left their homes in search for "easy money." Although gold mining was a high-risk endeavor that required constant gambles by the participants, many people still pursued it in hopes of great fortune. However, the idea of gambling mimicking life does not explain why some people gamble or why some people gamble more than others. This raises the concern that legalized casino gambling will create a high number of gambling addicts. Like other form of addiction, gambling addiction can destroy a person's social, family, and career life. For this reason many people feel that casinos will make it harder for gambling addicts to reform. Texas had the same concern when it decided to allow state lottery and pari-mutuel betting in 1992. As a result, the state did a follow-up survey to see if the number of people with gambling problems rose. Despite the overall increase in the prevalence of gambling between 1992 and 1995, Texas Commission on Alcoholic and Drug Abuse (TCAD) in 1995 determined that the percentage of adults having related gambling problems did not change significantly. The TCAD found that gambling addiction existed before and after the legalization of gambling in Texas (Wallisch 37). It also revealed that either through the Internet or driving to nearby Louisiana, gambling addicts would go out of their way to satisfy their need. A surprising element the TCAD found was that education played a more determined role in gambling addiction than the presence of legalized gambling. People who drop out of high school or do not have a college education were more likely to have problems with gambling (Wallisch 38). With this said, having the proper funding for education is very important in every aspect.
Another common theme associated with casino gambling is crime. Many types of gambling have been and still are illegal. When gambling restrictions were first lifted in Nevada, criminals were the first to open up legal gambling establishments. A lax regulatory framework in Nevada allowed members of organized crime to openly owning and operating casinos. To some degree, Nevada needed the criminals to make gambling viable because no one else had their expertise and experience. Up to the 1960s, Nevada had a difficult time keeping mobsters out of the casinos. Mafia financing, hidden ownership, employment of people with criminal background, and direct ties to organized crime overran Nevada. Because the federal government believed that Nevada casinos were supporting organized crime throughout the country, they wanted to have power over the Nevada gaming industry. To avoid federal government involvement, Nevada reformed its gaming industry. Due to Nevada's past association with criminals, people generally raise this concern whenever the thought of legalizing gambling is mentioned. Even when New Hampshire began its state lottery in 1964, there was concern that organized crime would take over (History 1). Much has changed since the days when the first modern casino in Las Vegas was opened. Organized crime has become part of the mystique of gambling but it is without significant influence today. Las Vegas and the business of gambling itself only hold historical ties with organized crime. Furthermore, researchers found that organized crime is more of a product of illegal or poorly regulated gambling.
Today modern casino gaming has safeguards to protect against organized crime. Casino gaming has become one of the most highly regulated industries in America. The companies and individuals involved are carefully scrutinized and held to extremely high standards and regulations. Publicly held companies such as Hilton and Sheraton dominate modern casinos. They must also answer to their shareholders who are thousands of individuals and institutional investors, to the Securities Exchange Commission, accountants, attorneys, payroll specialists, auditors, and market researchers. Casinos must be licensed and tightly regulated by state governments.
Another crime issue associated with gambling is street crime. U.S. News and World Report did a comparison of crime rates in cities with gambling versus those that do not. The crime rates were significantly higher in the places that allowed gambling. However, industry researchers dispute the view that cities with gambling have higher crime rates and point out that the rates are not higher when the tourist population is considered. In this regard, Texas would experience higher crime not necessarily from the establishment of casinos but rather from the increase in the visiting population. Therefore, if Texas decides to build vacation resorts or casinos, the crime rate would increase either way due to the large influx of people. For example, Atlantic City showed a jump in crime when gambling was legalized. The city went from fiftieth in the nation in per capita crime to first (America 61). But when the number of tourists is taken into account, Atlantic City does not appear to have a crime rate that is much different from other cities. Many people are also worried that street crime will become more prevalent if casinos are built. However, this is not necessarily true because crimes committed by compulsive gambler are often underreported. Researchers point out that compulsive gamblers are more incline to commit bad checks, embezzlement, check forgery, and fraud (America 61). Although this is not by any means acceptable, it also means that compulsive gamblers are highly unlikely to commit street crimes, such as snatching purses or getting money at gunpoint. Furthermore, modern casinos are known to have tighter security monitoring systems than most banks. Thus, the presence of crime will exist but with higher security this concern can greatly diminish.
What casinos will have the most impact on is the local economy. In 1995, gambling in the US grossed over 40 billion in revenues, excluding illegal gambling. This figure is large compared to other entertainment industries such as amusement parks, which had receipts of about 7 billion, and movies received about 6 billion (Gross 80). Casino gaming has clearly become a major form of entertainment. For example, with the help of publicaly held companies such as Hilton and Ramada, Nevada has shed its past image and transformed itself into a leading family tourism destination. Now gaming in Nevada has become a multibillion-dollar industry that attracts millions of people each year. Casinos are the most popular form of gambling. Although Texas implemented the lottery, it only accounts for 2 percent of the state revenue, which equates to two weeks of funding for public education (Lavine 9). Therefore, legalizing casinos gambling would have a more immediate and direct impact on the economy.
Although Las Vegas had tremendous success, many people insist that this level of success cannot be duplicated. The success story of Las Vegas is unique and hard to match, but it also demonstrates what a well-organized casino gaming industry can do for the local economy. For example, in 1996 Arthur Andersen did a study and revealed the positive economic impact that casino gaming had in three US cities where gaming had been operational since 1992: Joliet, Illinois, Shreveport, Louisiana, and Biloxi, Mississippi (Dalla 1-2). All three areas experienced the creation of thousands of new jobs that pay above the state averages and employed a larger proportion of minorities and women than do other employers in the regions. On average, in the three areas studied, the tax-to-wage ratio was 60 cents paid in state and local taxes for every $1 paid in wages. These revenues have gone to pay for community services and play an extremely important part of each city's budget. The number of people on public assistance, such as welfare, Aid for Families with Dependent Children (AFDC) and food stamps dropped dramatically in all three regions as well. And finally, in each city, the introduction of casinos led to growth in other areas, such as retail sales, commercial and new housing construction and restaurants. The following is the statistics found during the research. In 1996, Biloxi approximately 35 percent of those employed by the 10 casinos in the area were minorities, while minorities held only 22 percent of the jobs in the Metropolitan Statistical Area (MSA). Sixty-two percent (11,200) of the 18,100 jobs created in the area since 1990 were created by casinos. Women held approximately 60 percent of the area's casino jobs in 1996. Harrison County retail sales tax collections rose from $79.1 million in 1992 to $130.3 million in 1995. The number of AFDC recipients dropped more than nine percent in 1995 and 15 percent in 1996. After increasing steadily for many years, the number of food stamp recipients has dropped steadily each year since 1993. Casinos paid $76 million in 1996 state and local gaming taxes, up from $68 million in 1995.
In Shreveport from 1993 to 1996, 56 percent of casino employees in three gaming facilities were African-American or another racial minority; more than one-half (5,100) of the 10,000 new jobs created in the region between 1993 and 1994 were created by the opening of casinos. Casinos paid $110 million in 1996 in state and local gaming taxes, up from $99 million in 1995. AFDC payments dropped 14 percent in 1995 and 15 percent more in 1996. The number of food stamp recipients dropped by 15 percent in 1996. In 1994, the year in which the casinos opened, retail sales in Shreveport and Bossier City increased by more than 10 percent, the highest growth rate in 11 years.
In Joliet, 21 percent of the employees at the two Joliet casinos were African-American or another minority, and approximately 58 percent were women. Casinos paid $82 million in 1996 state and local gaming taxes. Retail sales were $3.2 billion in 1995, up from $2.4 billion in 1992, the year casinos opened. Unemployment rates dropped from 12 percent in 1992 to nine percent in 1994. After a steady increase in the first five years of the decade, the number of AFDC recipients has dropped by more than 14 percent since 1994 (Dalla 1-3). These findings provide concrete evidence supporting the power of the expanding gaming industry.
By allowing casino gambling, Texas may not have to depend too heavily on its sales tax as a major source of income. Possibly like Nevada, where revenue from casino profits account for more than fifty percent of the state revenue, Texas will not have to raise its taxes nor reduce public services to meet budget shortfall. Rated as a top recreational activity, casinos will also increase tourism. The state and especially local government can experience greater return from stimulated sales, hospitality, and transportation taxes. With increased funding, the local law enforcement will have the revenue to expand and heighten security measures to counter possible crime rise. Public school will be able to have adequate staffing and more funds will be available for scholarships or grants to local colleges. Over a period of thirty years, gambling has transformed from sinful to well accepted. While some people still view gambling as a sinful activity that corrupts society, others view it as a harmless form of entertainment. Overall, society has taken a cautious view of gambling. Of course, casino gaming may not be right for every community and it is not a magic economic silver bullet. However, if made part of a carefully crafted economic development plan, casino gaming can help revitalize communities and allow them to prosper.
Work Cited
"America's Gambling Fever." U. S. News and World Report, 15 January 1996, p. 61.
Dalla, Nolla. "Tales From The Felt." Cardplayer (27 April 2003): 8 pp. Online. Internet. 27 April 2003.
"Gross Annual Wager." International Gaming and Wagering Business. (August 1996): Online. Internet. 15 April 2003.
"History of Gambling Crimes: Las." CasinoChecker. Online. Internet. 15 April 2003.
Lavine, Dick, et al. "The Texas Revenue Primer: The Measure Of Our Means." Center For Public Policy Priorities. (March 2003): 25 pp. Online. Internet. 12 April 2003.
Wallisch, S. Lynn. "Gambling in Texas: 1995 Surveys of Adults and Adolescent Gambling Behavior." Texas Commission on Alcohol and Drug Abuse. (1996): 155pp. Online. Internet. 12 April 2003.
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